Rediff.com« Back to articlePrint this article

Festival discounts drive retail gold demand

Last updated on: October 29, 2010 10:27 IST

Despite high gold and silver prices, jewellery retailers have generated decent volumes this festive season.

Sales of gold in the form of jewellery, coins and bars have risen 20-25 per cent over last year's festive season on the back of discount offers.

The festive season is a period of about 45 days, ending around Diwali. A fourth of gold and silver sales happen during these 45 days.

Gitanjali Gems, a leading retailer, is offering pendants of various sizes, depending on the orders.

Under its Samriddhi scheme, every consumer gets a solitaire diamond jewellery item on purchase of diamond jewellery above Rs 15,000 of brands mentioned in the offer at one of the participating outlets.

Click NEXT to read further. . .

Festival discounts drive retail gold demand

Last updated on: October 29, 2010 10:27 IST

For example, for a purchase worth Rs 15,000-35,000, the company is offering a pendant. Any purchase above this can earn a pendant, a ring or an earring.

"We have witnessed a 77 per cent jump in retail sales," said chairman Mehul Choksi. Other than gold coins and jewellery items, the company is offering various discounts on the maximum retail price of various products.

India Post, which sells gold coins in association with Reliance Money and the World Gold Council, is offering a half-gramme coin for every 10g gold coin.

Click NEXT to read further. . .

Festival discounts drive retail gold demand

Last updated on: October 29, 2010 10:27 IST

Rosy Blue-owned Orra brand is offering a 10g silver coin on every purchase up to Rs 10,000 and a 30g silver coin for a purchase worth Rs 10,001-25,000.

Gold has surged 16.1 per cent to Rs 19,370 per 10g this year while silver has risen 33.5 per cent to Rs 36,610 per kg.

Anil Singh Thakur, associate vice-president with Gupta Equities, believes the festival demand is not big enough to drive gold prices higher. He expects the yellow metal to lose its shine by the first quarter of 2011.

"The market is overbought and is due for a decent correction, which shall provide a buying opportunity, as there is a lot of physical demand at lower levels.

Click NEXT to read further. . .

Festival discounts drive retail gold demand

Last updated on: October 29, 2010 10:27 IST

"Since gold has breached its all-time high, after the breach of the previous (high), we expect gold to test our target (decline to) of Rs 1,400 (per gramme), which can be extended to Rs 1,420 or maximum till Rs 1,450s," Thakur said.

Gold prices have been high due to its demand as a safe asset in an uncertain market.

The demand is rising on expectation the US Federal Reserve will undertake further quantitative easing in November to bolster economic recovery and growth and encourage consumer spending.

This will exert downward pressure on the dollar, which in turn has been driving gold prices higher. Gold generally moves inversely to the US currency.

Source: source image